MY 2004/05 rice production is revised downward to 17.4 million tons, down 3.4 percent from the previous year. Despite a domestic price-triggered expansion in cultivated area and better rainfall this year during the seeding and crop development stages of the main crop, the lack of rain during the reproductive stage dampened yield potential. The Thai Agricultural Ministry’s preliminary estimate of drought-affected area amounted to 8.9 million rai (1.4 million hectares), of which 7.6 million rai (1.2 million hectares) were main crop paddy. However, the recent estimate of damaged area was expected to be 5.7 million rai (0.9 million hectares), including the damage from flooding in the early stage of cultivation in some areas. The northeastern provinces, which account for about 60 percent of total main crop planted area, were most affected by the drought. MY 2004/05 main crop production is forecast at 20.3 million tons (13.4 million tons milled equivalent), down 2.3 percent from the previous year. Meanwhile, second crop production is estimated at 6 million tons (4 million tons milled equivalent), down slightly from the previous year, as expansion in cultivation will likely be limited by the drought-impacted lower level of water. Farmers are expected to expand second crop cultivation, as long as domestic prices are attractive, regardless the concerns over the water shortage.

MY 2003/04 rice production is revised up to 18 million tons due mainly to better-than-expected second crop production. The Thai Agricultural Ministry’s estimate for second crop production has been recently revised upward to 6.3 million tons of paddy (4.2 million tons milled equivalent) in response to attractive domestic prices, leading to expansion in cultivated area up to 9.4 million rai (1.5 million hectares), just under the previous year’s record of 9.5 million rai. Also, the government adjusted intervention prices upwards for second crop paddy by about 700 Baht/ton (roughly US$ 17/MT) from the initial intervention prices.

MY 2004/05 rice exports are forecast at 8.3 million tons, down somewhat from the previous year’s exceptional levels, in response to anticipated improvements in the supply situation of the major producing countries, particularly China. Also, Thai white rice exports to some major importing countries, Indonesia and the Philippines, will likely level off due to more available domestic supplies in these countries. Also, Thai rice export potential is expected to be limited by the strengthening Thai Baht and the high domestic prices (resulting from overshooting intervention prices). Intervention prices were set higher than the previous year’s levels by about 25-30 percent, as compared to the 18 percent increase in MY 2003/04 white rice average export prices. The situation will likely be even worse for fragrant rice (Thai Hom Mali rice), as MY 2003/04 export prices contracted unexpectedly by about 3 percent due to competition from Pathumthani fragrant rice (around US$ 100/mt less than Thai Hom Mali rice), the new Thai fragrant rice variety which can produce three crops a year in the central plain.

MY 2003/04 rice exports will likely reach a record 9.7 million tons, due mainly to strong demand from foreign buyers unable to secure rice from Vietnam and India, Thailand’s major competitors. Thai parboiled rice exports to African countries are expected to increase significantly due to limited exportable supplies of other major suppliers. Nigeria’s imports of Thai parboiled rice amounted to 697,396 tons during January – October 2004, up significantly from 431,707 tons in the previous year. Also, white rice import demand from China was extraordinary high, following its tight supply situation. During January – October 2004, Thai white rice exports to China reached 415,216 tons, as compared to 9,671 tons in the previous year. Meanwhile, China’s regular imports of Thai fragrant rice continued to increase by 8 percent to 118,632 tons. In addition, Thai white rice exports to the Middle East increased significantly, particularly to Iraq and Iran, more than compensating for a sharp drop in exports to Indonesia, which continued to impose an import ban throughout the year.

MY 2004/05 rice stocks will likely be at low levels for a second consecutive year due to the anticipated reduction in domestic production resulting from the drought. Also, rice exports are expected to remain high.

MY 2003/04 rice stocks are forecast at around 1.5 million tons, down significantly from the normal stock levels of the previous year. The contraction reflected the exceptional export demand. It is expected that old crop fragrant rice stocks will likely be so high that they could be sold until the first half of next year. Meanwhile, old crop white rice stocks are expected to be tight, due to aggressive export demand in African and Middle East countries in the second half of the year.